Not a chaotic combination at all and entertaining birds

I had some spare time this week so I took the opportunity to catch up with my reading. I recently, after a one year search, acquired a copy of the book: ‘The Edge of Chaos’ written by M. Waldrop. It’s a thrilling story about the brilliant (Nobel-prize winning) minds at the Santa Fe institute (in the late 80s early 90s) who discovered how the world adapts itself to a state of continuous renewal on the edge of chaos. In fact, life can only thrive on this thin edge. The word ‘world’ you can interpret as biology, physics, evolution, chemistry, nature, climate, economy (aha!)… In one sentence: how life develops into ever more complexity floating on the edge of chaos. From only a couple of basic and simple rules, complex behaviour emerges and this behaviour stabilises under the right conditions to a limited number of steady states. Let me give you some examples from the book:

• a water molecule is very simple: one oxygen bound to two hydrogens. Nothing spectacular, but throw some trllions of them together and what you get is emergent properties (properties that a single entity does not have but a group of entities do). Water is fluid, or turns into ice below 0°C or becomes vapour above 100°C. When boiling water, the convection bubbles are purely chaotic.
• or how people in the Middle Ages were able to build cathedrals using only some basic heuristics as they did not have the knowledge to perform stress calculations. Still catherdrals are wonderfully complex and have stood the test of time. Compare this to today's buidlings and structures calculated up to 5 digits behind the comma.
• or chess: from a limited number of rules, there are 10^120 different moves. In case you have trouble picturing this number (a 1 with 120 zeros), if you would make one move every microsecond since the Big Bang, you would only have scratched the surface of the 10^120 combinations by now.
• or boids, the simulated computer equivalent of birds that are programmed with 3 simple rules but behave like a flock of birds and have no problem avoiding objects, just like a real flock of say starlings. The three simple rules are: keep an as small as possible distance to other objects in the surrounding, including other boids; keep the speed equal to the speed of other boids around; try getting closer to the center of the group. Compare the computer simulation with a video of a falcon diving on a swarm of starlings. Isn't life (and science!) wonderful?

It all also links in with the fact that history does not flow but that it jumps (see Taleb et al), with "The Tipping Point" (Malcolm Gladwell), with "Thinking Fast and Slow" (Daniel Kahneman) and of course with "Chaos" (James Gleick). But back to ‘The Edge of Chaos’, finally I read a book confirming my feeling there is something wrong with the term 'sustainability' (I never liked it)! I always felt that sustainability does not exist otherwise dinosaurs would still be around. Maybe a harsh picture but so it seems, rather accurate.

Not a chaotic combination at all.

In between the reading, birds kept me entertained (no it's not what you think you dirty minds, I'm talking about our feathered friends). Mocking birds were picking up walnuts, flying high in the sky and dropping hem on the terras and street to break them. Blackbirds and buzzards were doing dogfights (with spectaular wingovers and barrel rolls). And a black redtail took his daily bath in the bird water tub. Ah Autumn can be so wonderful!

We don't have a clue, the Ten Commandments and a birthday present for me (please!)

Now that the weeks of Nobel-prize winning announcements are over, we can do a little evaluation. The Peace-prize was given to an organisation that not many knew before, a Belgian (François Englert) shared the prize for physics together with Peter Higgs, but the prize that raised many eyebrows was the one for economy. First of all, this isn't a real Nobel prize anyway as it is awarded by the Swedish Central Bank and not by the Nobel Committee.Only physics, chemistry, medicine, literature and peace were named as official prizes in Nobel's testament. Since 1968 the Swedish Central Bank prize for economy in commemoration of Alfred Nobel was instituted. So actually it is the odd one out and shouldn't actually be part of the Nobel prize-list anyway. Economy is not art (like literature), does not serve mankind (like working for piece) and it definitely is not a science. This year the economy prize went to Eugene Fama, Lars Peter Hansen and Robert Shiller. Summarising why those three won it could be done like this:

• Fama proved that "the value of shares are not predictable (in the short term) and do a random walk"
• Shiller proved that  "the value of shares is predictable on the long term"
• Hansen is an econometrist who found some complicated way how to "estimate  population parameters by equating sample moments with unobservable population moments and from that estimate the quantities..." (yes I know... I read this as "if you don't know the defining parameters of a population, you estimate some of these parameters and then calculate the quantities". Not helpful either? Let's just say if you don't know what you are looking at, you estimate what it is and from that estimation you then calculate it. Or even simpler: a statistical method to measure Fama and Shillers theory against the real prices).

But next to that hocus pocus, I think the real message behind awarding those three with the prize of the Swedish Central Bank is: "about economy - well... we don't have a clue either". It's about time someone finally admits economy is not a science. I would have preferred if the Swedish Central Bank would have just bluntly stated this and abolished their prize. Alfred Nobel would rest in piece again if they did. After all, they got it spectacularly wrong in the past. In 1997 Merton-Scholes got awarded the prize because they found a formula to put a price on options. They started their own hedge fund in 1994 using their self invented formulas, received the Nobel prize in 1997 and went spectacularly bust in ... 1998 loosing 2,3 billion $ in 3 weeks for a total of 4,6 billion $ loss.


Former Nobel peace-prize winners met this week and Lech Walesa came up with an inspiring proposal. He said we should make a new version of the Ten Commandments that would be accepted by all cultures, nations and religions: "We need to agree on common values for all religions as soon as possible, a kind of secular Ten Commandments on which we will build the world of tomorrow." That's the kind of idea that stimulates my mind! At first sight one might say that Mr Walesa is a bit too ambitious, that it is impossible for everyone to agree on ten basic rules. On the other hand, we are all human and irrespective of our culture, religion or political system, we all experience the same emotions that make us tick. In his speech Mr Walesa stated that besides universal values, the international community needs to focus on the economy of tomorrow, which definitely should not be based on communism nor on capitalism as we have it today. He is definitely right about this!
I am not going to post the Ten Commandments Moses brought back from the mountain, let's do this exercise with an open mind. the floor is yours.

Picture AFP

My birthday is coming up next moth and for those of you who are still desperately looking for a nice birthday gift, please have a look at this website: http://www.rmauctions.com/lots/?SaleCode=NY13&feature=0&sort=lot The 1966 Jaguar E-Type or 1956 Aston Martin DB2/4 MkII would be highly appreciated. I'll show you my eternal gratitude by taking you for a spin!

Pictures courtesy of RM Auctions

What's wrong with this concept and Canberras

So the drama queens in the US made a last minute deal. And they found their inspiration on how to solve the crisis over here in Europe: don't solve it, postpone it. So all what happened on Thursday was giving the can one massive kick and it rolled further until February 7. That's when the US will hit their new debt limit: 17 trillion $. For those of you who think all those Armageddon stories about the end of the financial system if the US would default (even if only technically and for a couple of days) is nonsense, here is what Jim Yong Kim, president of the World Bank, said just after the deal was reached: "the world economy escaped a potential catastrophe". So we can all breathe now for a couple of months and go through the same flirting-with-disaster again early next year. In the mean time you can be sure that some parts of the world have drawn their conclusion. I highly recommend reading what China published in Xinhua (China's official press agency): U.S. fiscal failure warrants a de-Americanized world - see http://news.xinhuanet.com/english/indepth/2013-10/13/c_132794246.htm Bottom line, the US Dollar will no longer be the reserve currency of the world.

But don't we live in a strange world where we all hope the US will continue making debt so they and the rest of the world can continue to prosper? Isn't there something thoroughly wrong with this concept?


The bad thing about going to conferences (like I did past two week), is that they can be very boring. The good thing is you get to chat to some interesting people. One lunch I found myself talking to a former RAF pilot who flew the Canberra. It is one of those post-war designs that had a very long service life. The English Electric Canberra B2 started service with the RAF 101 Squadron in January 1951. It bowed out of service 55 (!) years later when the PR9 variant did a flypast at RAF Marham on July 28, 2006. The Canberra was still used extensively  in Iraq and Afghanistan. I've only seen the Canberra once. The picture below is from an airshow in Koksijde in the nineties. The awkward nose is because this is a  T Mk 17 electronic warfare variant (apologies for the grainy picture - film roles had to be developed in those days so no 10 Mb pixel quality).

And one more picture, this is from the model I have in my own collection: a Martin B-57 which was a license-built version of the Canberra for the USAF.

Please pay us, cut your flesh or someone else's, surely they can do better than that? And a tribute.

I'm starting to get worried that my blog will rise on the anti-US hitlist... It's really not meant like that. And I'll make up for it at the end (well... a little bit anyway). But it's not me that is spewing criticism, it's Joe Stiglitz. Sitglitz is a US citizen, Nobel price winner, former chief economist of the World Bank, author of several books and one of the most influential thinkers of today. And what he said last week was not open for interpretation. He said that if a country had applied for World Bank aid during his tenure, with a financial regulatory system similar to the Federal Reserve's - in which regional Feds are partly governed by the very banks they're supposed to police - it would have raised alarms: "If we had seen a governance structure that corresponds to our Federal Reserve system, we would have been yelling and screaming and saying that country does not deserve any assistance, this is a corrupt governing structure."

No further comments but you can read more here: http://www.huffingtonpost.com/2010/03/03/stiglitz-nobel-prize-winn_n_484943.html

In the mean time the US is still in shutdown. This also affects the National Weather Service where about 4000 employees are continuing working but without being paid. The NWS amongst others provides the weather forecasts for airports. The Anchorage office issued last week this forecast, including a message to its government (see red box):

But then yesterday, the big whammy hit those of us who live in the eurzone with thanks to the IMF. I wrote before (here) about the bail-in becoming standard procedure in case of a bank default. Saving accounts will be stripped above a supposedly guaranteed amount of 100000,- €. The IMF has just taken this a step further and proposes to levy a one-time tax of 10% on all saving accounts of the 15 countries of the eurozone. I repeat: the IMF proposes to levy a one-time tax of 10% on all saving accounts of the 15 countries of the eurozone. The idea is not new and has been floated by other groups and a (Danish) bank CEO (by the way it seems the Danish banks are in need of > 15 billion € to meet capital rules - see Bloomberg - now I don't believe in coincidence, do you?).

The idea is included in the IMF Fiscal Monitor of October 2013 under the chapter "Taxing our way out - or into? - trouble". I copy the relevant text for you below:

So is this just some brainstorming thoughts of economists who don't have their feet in reality any more? Hmmmm, not sure. It becomes difficult to further tax industry without killing it completely. It is equally difficult to further tax the income of employers. Substantially raising the VAT would have equal detrimental effects. So what is left is that enormous amount of capital that is 'hiding' in saving accounts and is low taxed (or not at all below a certain level). If I take Belgium's example: the total amount on saving accounts is 246 billion €. Yes largely untaxed (only if your interest rises above 1880,- € / year, you pay taxes). But bear in mind I only get to keep half of my salary (50% is taxed away) and VAT is 21% so anything that I manage to save is already after our government took the bulk of my gross income (in addition my employer pays another 30% of tax on top of my gross income). Now this 246 billion € of savings, you need to offset it against Belgium's debt: 370 billion €. So a 10% tax levy would substantially lower it. Very tempting for politicians and I bet they would already have done it if they thought they would get away with it. So far it hasn't happened but the pressure is rising. Every budget control our government does look with watering mouth to these savings and you can hear them think "if only...". Of course scaling down the government expenditure would be another way of making savings but of course that doesn't even cross their mind. If you had the choice what would you do: cut your own flesh or someone else's? So read that IMF proposal again and draw your conclusions.

One of my fellow twitterers pointed me to an article on helicopters of the future (this is the kiss-and-make-up part with the US) . The Pentagon is running several projects looking a couple of decades ahead. Four companies have been selected to refine their initial designs: Bell Helicopter, Sikorsky Aircraft, AVX Aircraft and Karem Aircraft. One particular design study from AVX caught my eye. I love new technology, and gazing into the future mesmerising what might be possible is fascinating. And the US has often been the birthplace of many new technologies, so the Pentagon projects promises to be very inspiring. But when I saw the AVX, I had a flash-back.

Picture courtesy of AVX

It immediately reminded me of an iconic rotorcraft: the Gironef! The Gironef was first used in 1945 (The Island of Amoras), designed by professor Barabas. Ok ok it's from a (Belgian) comic strip (Suske en Wiske - or Spike and Suzy in English - for other languages see http://en.wikipedia.org/wiki/Spike_and_Suzy).I know both designs are not identical (double main rotor, canards, ducted fans, tailplane) but that's only because the AVX design is just a first study and needs further refinement :-).

From the album 'The Island of Amoras'

But let's be honest: if we Belgians thought this one up back in 1945, then surely the US can come up with something better than this?

This morning I heard the news that Scott Carpenter died at the age of 88. He was one of the Mercury Seven, the second American to orbit the Earth and the fourth American in space, following Alan Shepard, Gus Grissom and John Glenn. As a small suggestion  to all of you who won't be watching football this evening (like me), I suggest to watch the epic movie "The Right Stuff" (watch it here or here) which tells the story of the Mercury program. As a tribute to Astronaut Carpenter.

God bless the United States of America, Costa Europe and landing at stall speed

The greatest nation on earth is setting us quite an example. Those who want to bomb the rest of the world to democracy has again shown us their democracy actually... does not function all that properly. Their politicians couldn't agree on the annual budget, one of their basic responsibilities, and so the government shut down. It closed, no one works (except NSA, CIA, FBI, ...).
And it's not that the USA doesn't have some problems to sort out. Allow me to give you some numbers:

• With 716 prisoners/100000 habitants, they are worlds number 1. For reference, Greenland is the first European country on 25th place with 340, Iran is 39th with 284, and Belgium 146th with 100 (data from wiki)
• 15% of the population is on food stamps (see here)
• With an infant mortality rate of 5,9/1000 births, the US stands at a 51st place (Nr 1 is Monaco with 1,81 and number 2 Japan with 2,17, see here)
• Possesses 7700 nuclear warheads (see http://www.fas.org/programs/ssp/nukes/nuclearweapons/nukestatus.html)
• Still has 3150 tonnes of chemical weapons (wiki and also here)
• Government debt about to reach 16,7 trillion $ (remember those zero's?), that's 1 trillion$ more than its GDP...

Talking about that debt, in about 2 weeks it is crunch time again between Democrats and Republicans because the US will hit that 16,7 trillion $ ceiling and the politicians thus have to agree to raise it or do some drastic cuts. Maybe that's why they shut the government down? So they can't spend any more!

In any case the CEO's of America's biggest banks are worried, because half a dozen of them paid Obama a visit on Wednesday. And Treasury Secretary Jack Lew wrote a letter to Congress saying if the debt ceiling is not raised by the 17th of October the government will not be able to meet all its financial commitments, such as making payments to US debt holders, government contractors and social security recipients: “If we have insufficient cash on hand, it would be impossible for the United States of America to meet all of its obligations for the first time in our history.”. (see http://www.politico.com/story/2013/10/debt-ceiling-treasury-final-extraordinary-measures-97690.html). In other words: please let me continue my money printing.

But let's not be cocky about it. Our politicians are not a lot better either. Italy went through its regular political turmoil, the Portuguese government lost heavily in local elections, the anti-eurocrats won 31% of the votes in Austrian elections, in Greece - the cradle of democracy - government is jailing opposition leaders, the Spanish Prime Minister Rajoy was grilled by Bloomberg during an interview in NY about his party’s alleged role in the Bárcenas campaign funding scandal and its destruction of vital evidence relating to the criminal case (see http://www.youtube.com/watch?v=SBgCpnlHBSE#t=169) and Mutti is still struggling to form a government after her big win. So sssssh, give Merkel some time. Once she has her own government sorted, cruise ship Costa Europe will have its captain back. After all the Costa Concordia was winched upright recently as well.


If you think US politics are up for a challenge, what about landing at Yrausquin Airport in the Dutch Antilles! There's a challenge for you. Watch this video of a Twin Otter doing a perfect landing (stall warning goes off at touch down), at the 1300 ft (396 m) long runway: